To consider Notices of Motion.

Council was invited to consider a motion on the Worcestershire Local Pension Board.

Councillor Marsh, proposer of the motion, confirmed that, in accordance with Standing Order 4.1.111, with the consent of the seconder, Councillor Harvey, she wished to alter the published motion to a version now to be seconded by Councillor Phillips.  The Chairman read the following altered motion to the meeting:

“We welcome the reduction in fossil fuel investments held by Worcestershire pension fund in recent years and call on our Herefordshire Council representatives on the Worcestershire Local Government Pension Fund board and committee to work with Worcestershire Fund to update their responsible investment strategy and seek alternatives to investments in fossil fuels.

In particular we urge them to advise the Fund to:

·        provide regular information on the results of the Fund’s policy of engagement with its fossil fuel and other carbon intense holdings; and

·        review their Statement of Investment principles and Responsible Investment principles in the next year, including undertaking a carbon risk audit.”

In moving the motion Councillor Marsh made the following principal points:

·          The fund was administered by Worcestershire County Council and there were 22 contributing members.  Herefordshire Council had some limited influence having one representative on the Pension Fund Board and, one on the Pension Fund Committee because it was the second largest member.

·          Other contributing members were also looking at the issues raised in the motion, the two proposed actions of which represented first steps.

·          The fund had already made some reduction in investments held in fossil fuels.  This was not clear on the website and she hoped that the motion would contribute to a move to greater transparency.

·          The intergovernmental panel on climate change had concluded that urgent action on climate change was needed.  Measures took some years to take effect.  The Council had had a carbon reduction plan in place for itself and the County for some time.  The wish was to see the pension fund investments reflect the council’s approach.  She outlined progress on a range of measures the council had initiated to reduce carbon usage. 

·          There were investment opportunities in new technologies and approaches and the Government had stated that pension funds could take climate change into account as a financially material consideration.

Councillor Phillips seconded the motion making the following principal points:

·        It was to be welcomed that the fund had already reduced investment in fossil fuels from 5% to 1.5%.

·        The Local Government Pension Scheme (LGPS) was a defined benefit scheme and if there was not a sufficient return on investment employers (effectively council taxpayers) would have to increase their contributions. 

·        The LGPS was the only funded public sector scheme so required a responsible investment strategy.  New ministerial guidance was currently awaited.

·        Local authority responsibility for public health presented another dilemma for funds in balancing their fiduciary duty.  At the same time as seeking to reduce smoking the local authority pension funds held investments in tobacco companies because of the high return available.  However, the investment strategy was over the long term and accordingly there was merit in reducing investment in products such as fossil fuels.

The following additional points were made:

·        The council had a leadership role.  Other councils and other public bodies had already changed their investment policies.

·        Regard had to be had to the fiduciary duty but investment in green technologies and other technologies needed to support life in a world without fossil fuels represented investment opportunities with growth potential that would also be to the benefit of future generations.

·        A member commented that the motion whilst worthy would have little practical impact and in itself be little more than a gesture, compared with other actions the council could take.

·        A member clarified the council representation on Pension Fund Board the Pension Fund Committee on the respective roles of its representative on each.

·        The continuing importance of oil to economies and the range of important products produced by the petro-chemical industry had to be recognised.  The performance of oil company shares reflected this importance. In the face of a number of uncertainties in the world investment advice was that exposure to oil stocks was sensible having regard to risk.

·        The many current important uses of oil where it could less readily replaced by another product demonstrated the sense in reducing the use of fossil fuels simply for fuel.

·        Attention was drawn to the work of Carbon Tracker, an independent financial think tank that researched the financial case for divestment for fossil fuels.

·        Members were urged to continue to explore the potential for the council to take actions to reduce emissions and to address areas where investment was in conflict with its wider duties.

Councillor Marsh in summing up referenced Carbon Tracker’s analysis that the 2020s would see a peak in fossil fuel demand and prudent investors should divest into other funds.  She welcomed the opportunity for the council to act.

RESOLVED:

“We welcome the reduction in fossil fuel investments held by Worcestershire pension fund in recent years and call on our Herefordshire Council representatives on the Worcestershire Local Government Pension Fund board and committee to work with Worcestershire Fund to update their responsible investment strategy and seek alternatives to investments in fossil fuels.

In particular we urge them to advise the Fund to:

·        provide regular information on the results of the Fund’s policy of engagement with its fossil fuel and other carbon intense holdings; and

·        review their Statement of Investment principles and Responsible Investment principles in the next year, including undertaking a carbon risk audit.”